ELIZABETH — The Wall Street Journal has reported that U.S. Sen. Robert Menendez urged the Federal Reserve to bailout a struggling bank without disclosing that two of his top campaign contributors were chairman and vice chairman of the bank’s board of directors.
Menendez tried to persuade the Federal Reserve to approve the acquisition of the Elizabeth-based First BankAmericano, which was founded by state Sen. Raymond Lesniak and chaired by Joseph Ginarte, a high-profile attorney who has given at least $30,000 to Menendez and his political-action committee since 1999, according to federal records.
Had the acquisition been approved, Ginarte and Lesniak would have been prevented from losing what was left of their investments in the bank.
First BankAmericano, which had $163 million of assets when it was closed by banking authorities, cost the FDIC $15 million — a price paid by taxpayers.
William Black, a federal bank regulator during the savings-and-loan crisis two decades ago, and like Menendez a Democrat, called the senator’s letter “grotesquely inappropriate,” given his ties to the two directors.
Black, now a law professor at the University of Missouri-Kansas City, said the letter crossed an unofficial line by asking regulators to approve an application instead of simply asking that it be given consideration.
In his July 21, 2009 mailing, Menendez attached a copy of the permission application for JJR Holdings to acquire First BankAmericano of Elizabeth and specifically asked Fed Chairman Ben Bernanke to sign off on it.
Bernanke did not follow through, and First BankAmericano closed anyway, on July 31. Ginarte and Lesniak lost their entire investment, which they would not have done had regulators done as Menendez asked.
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